The Sandman Awakens
Eventually we'll emerge stronger than ever.
That line in the sand is a very simple one: Who will stay and who will go?
The financial industry is undergoing a seismic rebalancing and once it's done, some of those tickers on your screen will be left standing on others will not (consolidation or bankruptcy).
It's scary, yes, but the phoenix of the new world order will rise from the ashes.
The singular goal--for investors, traders, people--is to find our way to the other side of the ride.
That's not a directional call--the government is cornered and they'll pull every possible string at their disposal to turn the tide and squeeze the shorts (as if it were that easy).
What if they run out? They'll invent more. They know what's at stake--they must stem the contagion or the dominoes will splinter throughout every corner of the world.
I suppose this is why my Sleep-O-Meter has been red-lining. The risk has turned into reality and it will persist regardless of where today's trades settle. It's likely also why I've put my personal interests aside--and trading much less--so I can focus on sharing my eyes with ye faithful.
Indeed, I walked into a restaurant last night and, on the way to the men's room to splash water on my face, I stopped and looked around the room. As I watched the smiling, unsuspecting patrons, I felt like jumping on a table and screaming "PAY ATTENTION to what is happening!"
Most people--including the Federal Reserve, Treasury and politicians--wait for something bad to happen before paying attention to the obvious. And others are conditioned to believe that no matter what, the market--or government--will bail them out. It's easy to understand why--we've been conditioned by our past--but we must always see the other side.
To quote something we spoke about in Ojai in 2005:
"The problem that comes from engaging in high risk behavior for which the consequences are absent, even if only temporarily, is that such high risk behavior begins to appear normal, and the entire scale of risk gets adjusted and pushed out. When we look at sentiment proxies such as the volatility indices and investor’s intelligence reports, investors seem to be saying that it doesn’t—and won’t—matter."
I'll shift my lens to trading in the next coupla posts--noting such things as the traction in the semis such as Applied Materials (AMAT), Novellus (NVLS), Maxim and Xilinx (XLNX)--but the big picture discussion is entirely more important, in my most humble view. It's my sincere hope that Minyans "heard" what we've been saying and have positioned accordingly.
If not, know this--it's never to late to start.
Capital preservation, debt reduction, financial intelligence. I'll add one more dynamic to that---community.
Surround yourself with people you trust who have skill sets that complement their own.
People who are very good at what they do but better at who they are.
People who understand that it'll be a long, hard road but know that we'll get through this together.
In a word, that place is Minyanville and, as always, we're humbled by your presence.
May peace be with you.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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